The Singapore Market this Week: It’s all About Swiber Holdings Limited

The Straits Times Index (SGX: ^STI), Singapore?s local stock market bellwether, tumbled 2.6% during the week to finish at 2,869 points. This compares with the previous week?s close of 2,945 points.

Of the 30 stocks that make up the index, most of them ended the week with losses. The biggest loser of them all was banking giant DBS Group Holdings Ltd (SGX: D05) – its share price had declined by 5.4% to S$15.41.

DBS announced on Thursday that it has a total exposure of around S$700 million to oil & gas services provider Swiber Holdings Limited (SGX: BGK), which chose to liquidate itself earlier during the week. The bank?s exposure…

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The Straits Times Index(SGX: ^STI), Singapore’s local stock market bellwether, tumbled 2.6% during the week to finish at 2,869 points. This compares with the previous week’s close of 2,945 points.

Of the 30 stocks that make up the index, most of them ended the week with losses. The biggest loser of them all was banking giant DBS Group Holdings Ltd(SGX: D05) – its share price had declined by 5.4% to S$15.41.

DBS announced on Thursday that it has a total exposure of around S$700 million to oil & gas services provider Swiber Holdings Limited(SGX: BGK), which chose to liquidate itself earlier during the week. The bank’s exposure comprises of loans, bonds, and off-balance sheet items. Swiber has since changed its mind and opted for judicial management instead.

The exposure is partially secured and because of that, DBS “expects to recover half of it and will provide fully for the anticipated shortfall.” The bank added that it will also “tap on its surplus general allowances and the net allowance charge will be lower, at about SGD 150 million.”

The question many investors may have now is to the quality of DBS’s oil & gas-related loan portfolio. This may be answered during DBS’ second-quarter earnings release on 8 August 2016. My Foolish colleague Stanley Lim has also explored the effects that Swiber’s fall from grace may have on DBS’ business going forward.

Another question that market watchers could have is if there are more “Swibers” out there in the market. You can get some clues from an article by my fellow Fool, Chong Ser Jing, right here.

Another company which saw its shares bleed during the week was SIA Engineering Company Ltd(SGX: S59). The aerospace company released its financial results for the three months ended 30 June 2016 during the week. Its top-line for the fiscal first-quarter declined by 2.1% year-on-year to S$271.6 million but its bottom-line managed to jump by 380% to S$198.4 million, thanks to one-off gains booked on the sale of a subsidiary.

SIA Engineering’s shares closed at S$3.70 on Friday, down 2.1% for the week.

Only eight stocks within the Straits Times Index ended the week with gains. Jardine Cycle & Carriage Ltd(SGX: C07) was the biggest winner with its shares gaining 5.8% to S$39.23.

The company announced its financial results for the six months ended 30 June 2016 on Friday. Underlying profit slipped by 8% year-on-year to US$332 million due to lower contributions from Indonesian conglomerate Astra International, which is just over 50% owned by Jardine Cycle &Carriage.

“The challenges affecting Astra’s businesses in the first half are likely to persist for the remainder of the year, although steady performances are expected from its consumer finance and automotive operations. Elsewhere, it is anticipated that competitive pressures will continue to affect the Group’s Direct Motor Interests and Other Interests.”

The SPDR STI ETF(SGX: ES3), an exchange-traded fund that tracks the fundamentals of the Straits Times Index, is now trading at 12.3 times trailing earnings and has a dividend yield of 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.

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